Y Combinator Startup Podcast - #140 - Aaron Harris on Fundraising and Meeting with Investors

Episode Date: August 21, 2019

Aaron Harris is a Partner at YC and before that he cofounded Tutorspree.He’s on Twitter @harris.The YC podcast is hosted by Craig Cannon.Y Combinator invests a small amount of money ($150k) in a large number of startups (recently 200), twice a year.Learn more about YC and apply for funding here: https://www.ycombinator.com/apply/***Topics00:00 - Intro00:42 - Seed fundraising process3:32 - Emailing investors9:32 - Parallelized fundraising process12:17 - Meeting with investors14:17 - Overcapitalization17:07 - Communicating your plan to investors19:02 - Evaluating investors 22:57 - Fundraising process for a Series A company27:02 - Meeting Series A investors28:57 - Post-Demo Day psychology

Hey, how's it going? This is Craig Cannon and you're listening to Y Combinators podcast. Today's episode is about fundraising and it's with Aaron Harris. Aaron is a partner at YC and before that he co-founded Tudorsprey. He's on Twitter at Harris. All right, here we go. Aaron Harris, welcome to the podcast. Thanks, Craig. Good to be here. So we are a couple days away from Demo Day and I figure there's no one better than you to talk about fundraising advice with. So I want to start with some seed fundraising advice in the context of, we can just say broadly like, you know, YC or another like accelerator,

like a company in that situation. How do you think about it and how would you advise a founder to figure out a process to do a seed round? Yeah. So I actually think this is broadly applicable to anyone thinking about raising. the core idea behind Demo Day, the reason it's so helpful for founders is two things. One, it gives them essentially an artificial forcing function.

It's just saying, hey, there's this day and time when I'm going to go raise money. And it makes you focus everything on that, right? The mistake that a lot of founders make is that they are constantly fundraising while building product and trying to do both things at the same time. And what we did with Demo Day was say, no, no, no, no, you do one thing at a time, right? You basically take your product work and you make that X number of months until it's good enough, until you have customers. And then at some point, when it's good enough, you switch over to fundraising. Because fundraising takes all of your time and energy and effort.

And to do it well, you really need to work on it. And you can't work on your company and your product and your customers at the same time. So Demo Day forces companies, the knowledge that's there, forces companies to say, or founders to say, hey, I'm doing this now, and then I'm going to fundraise. Now, the reason a lot of people feel sick to their stomachs to do that is because they think, oh, well, I'm never going to meet the investors. So I have to spend all my time hustling to meet investors. And this is actually another misconception, right? When you go on, you try to meet investors and you got nothing, they don't want to talk to you. Nope.

Which is obvious, right? They have other things to do. even though it's their job to meet with companies, you know, it's not an angel's job to meet with companies. They do it on the side. And so when you go and say, hey, I have this idea, well, there's a lot of ideas. What they want to see is some evidence that you're going to do the things you say you're going to do. And so when we have Demo Day, we have this thing where it says, oh, well, we're going to have 3,000 investors listening to your pitch at the same time and sort of, oh, of course, I don't have to talk to investors before that. I'm going to talk to all the investors.

But any founder working on a company can kind of do the same thing because if you spend Okay, let's say you're not doing YSC. And you say, well, I want to replicate that experience. I'm going to spend three months, and all I'm going to do is work on product, talk to customers, make things people want, you know, then write more product, talk to more customers, write more product, right, iterate on that. At the end of that three months. At the end of that three months, I'm going to go to investors and say, hey, look, I have a fully built product. I have a bunch of customers. It's growing.

The investors will be very excited to meet with you, even if you're cold emailing them. Right. when I get cold emails from people who are clearly doing both things at the same time, my advice is almost universally, hey, you need to focus more on your actual customers, right? Because you don't have anything yet. To step aside for a second, let's actually talk about that email, emailing an investor. Yeah. Say, let's say you did it by the books. Like, you're not a bullshit artist. You actually spent three months building something. You have some customers. How do you think about emailing a seed stage investor?

So there's a trick in this and that your email needs to be both short and informative. Right. And a lot of the way that people write emails, they'll write long emails that are informative or short emails that are totally irrelevant. And so the trick is you need to do some research on the person you're emailing and figure out, are they interested in this space at all? I get blind emails where I'm clearly just CCed or BCC'd with a hundred hundred other people saying, dear Mr. Harris, you might be surprised to learn about our incredible

opportunity to make lots of money. That's clearly not something I'm going to respond to. But when I get an email that says, Aaron, I know that you're as a partner, YC, you've worked with a bunch of companies that do X. We're working on that. We've built a product and we launched it a month and a half ago. Here's what we've learned. And if you can say something interesting about what you've learned in addition to the progress you've made. And by the way, the progress for me isn't necessarily about traction. There's this misconception that angel investors or investors in general only invest in traction. And it's true that that's nice. But what we're more interested in seeing, or at least what I am more interested in seeing, is how much progress have you made relative to the

time you've been working on something? And that progress could be actual traction with customers, or it could be doing something that's hard technically in a short period of time or building something interesting in a short period of time. The thing that no one wants to see is I've been working on this for four years and I just finished the alpha of what I'm working on. Right. Sort of say, okay, I understand you're working nights and weekends, but it's unclear that a little bit of money will accelerate that.

Right. And how important do you think it is in terms of communicating your unique insight to the investor? I think it's useful, but to me, it's less about fully communicating a unique insight as showing me something interesting that I didn't know. And so there might be a bunch of people who have realized this thing you're talking about, but if I don't know it, that's kind of cool. If I can't think of it in thinking about a problem for a few minutes, then I start to get interested and I want to have a conversation. Okay. The next thing that's important with investors is, you know, when you're kind of, blind emailing them, don't immediately ask for a half an hour of time with no clear ask, right?

Because time is hard to come by. You already have my attention in email. Make a really clear concrete ask. A lot of people will ask, say, oh, do you have a half an hour of time? I'll say, well, how can I help? And they'll say, oh, well, we want to know if you invest. You want to invest and say, I don't actually tend to do that outside of YC. So why don't you apply to YC? And then, you know, You're potentially a bad example here. I guess so. I guess that's right. But most investors.

Yeah, it's someone who's going to cut a check. So I'm like, hey, Aaron, this is Craig. I'm working on this. We've been spending three months on it. We've had this really big learning. It's impressive. What's a question that you like to see? So you need to know, okay, you can't really know ahead of time what their investment process is or what they like to invest in.

So I think you want to say, you know, here's what we're doing. Here's how much we're looking to raise. I would love for you to be an investor. What else can I tell you? What else would be interesting? Or can we meet to discuss an investment? Right? And people try to do this weird coy thing.

They say, oh, well, I'd like to just meet and catch up. Whatever. People tend to catch up with friends. Yeah. Not with brand new people they've never met before who are looking for something in terms of money. Right. So just be direct because people are busy and I think they appreciate directness. Yeah, you can get to the point.

Yeah. Last question on this. Big attachments, decks, stuff like that. Not up front. Not up front. I would not attach a big deck to something unless someone asks for it. If someone asks you for a deck, this is a little bit tricky. A lot of them, a lot of people will say, hey, can you just send me a deck as a way to just shoot things down? Yeah. I think a really well-crafted deck actually tells your story well and can convince people. But one of the things you can say is, you know, hey, I'd love to send you the deck, but I'd really prefer to pitch you on it first in person.

But if someone's insistent about seeing the deck, send the deck. One of the most annoying things I've seen is, you know, and I've seen this email from other people saying, hey, can I see a deck? And then the founder just keep saying no and inventing reasons not to. And you got to respect that investor's process at some point, unless you have significant leverage. Yeah. And so one of the things here is that the amount of leverage.

you have changes the kinds of emails you can send and changes the interaction. And you just have to be conscious of where you are. I wrote an essay about this about how to manage process and leverage when you're in fundraising. And there's a continuum about what you have to do to get money relative to how much interest there is in your company. And you just need to know where you are. Yeah. And usually if you don't think you have much leverage, you probably don't have much leverage. And look, sometimes investors, well, it's rare that founders, uh, yeah, it's rare that founders underestimate. the amount of leverage they have, they usually overestimate, which leads to some funny situations. Yeah. Okay. So let's get back to process. So you have spent three months working on this.

You have said, okay, let's say usually a CEO is going to go out and fundraise. What would a good process look like for you? I think the main trick to a good process is a parallelized process. Okay. Right. The mistake that a lot of founders make when they go to fundraise is they go and they talk to, you know, one investor. And then a week later, they try to talk to one more investor. And then a week later, they try to talk to one more investor. And the reason that's a problem is because you can think of the investor community as a set of interconnected nodes, right? And information is a wave front that moves through those nodes. And if you just talk to one investor, information moves faster than you. Right? It's kind of like the wave propagates

faster than the actual thing. Or it's like, you know, when there's a nuclear blast or whatever, right, the shock wave. Or it's like lightning. Right. Or lightning. Right. Right. Right. Right. Right. You see the lightning before you hear the thunder. Yeah. Right. So it's like that. Information is moves at light speed. You can only move at the speed of sound. Right. Yeah. So when you talk to one investor at a time, basically information about your company starts spreading. But it's even worse than just a one-to-one spread because each investor knows multiple people. And so the wavefront gets wider and wider and wider. And so if you talk to one investor and they pass on you, they tell three of their friends, they talk to the schmuck that has a stupid company, then those talk to three, those talk to

three. And pretty quickly, you know, you kill a whole section of potential investors if you pitch one investor badly. In contrast, if you set all of your meetings up quickly in sort of a tight time ban, you can talk to everyone at the same time. And then they don't tell each other what's going on because they're all actively evaluating the deal. Investors don't share information about a deal until they've kind of made a decision because they want to look smart, right, which I understand. They want to look smart or they want unique access and don't want to have to compete. And so if you immediately create a situation in which multiple people are seeing it, you raise your chances of getting something through.

And then if you manage to create buzz around your deal where a bunch of people are actively talking about and liking it, again, that information, that wavefront travels in a really positive way and more and more investors hear about you and want to get in. So practically speaking, stack as many as possible in a week. Yeah. Now, within limits, right? You shouldn't schedule 35 meetings in a day.

So you're exhausted, right? So you're exhausted, right? Most people can't actually handle that. No. But within limits, yeah, you want to kind of stack the meetings together. Okay. And so then when it comes to the actual meeting itself, I know you're a proponent of figuring out the company's story.

Yeah. So when it comes to storytelling, this is slightly different than, for instance, like a customer interview where you're doing a lot of listening. Completely different. Right. So how would you think about an investor meeting? Okay. Well, it's actually completely different from a customer conversation,

not so much in how much you listen versus talk, more about the kind of story you tell. So what's interesting is that some of the investor meetings that go best are the ones where the investors end up doing a lot of talking and they get themselves really excited about what you're doing and talk themselves into a deal. So if that happens, don't stop them. If an investor is riffing on wild ideas about how gigantic,

You could be kind of smile and nod and give them a right on and get the check at the end of it. But the story you tell to an investor versus a customer is different because to the investor, you're telling the story about how you are going to rewrite the future in a way that creates that in a way that makes your company gigantic, right? Future is going to happen. One way or another, there's a future. But what investors want to hear is that you're an integral part of it. Your company is an integral part of that.

And that by doing that, you capture some major market. Customers don't care about that. Customers care about you solving their problem. And this is a weird thing because you'll see people who are so caught up. Because, again, you've spent these three months talking to customers. And so you want to go to the investor and tell them, oh, here's this problem I solved. Let me tell you all about how I, you know, solve this problem so well. And you want to do that, but that's the smaller part of the conversation.

It's more what does solving that problem allow your company to do at a grand scale? The other mistake that founders make in that conversation is they jump immediately from where they are today to this grand vision of when they're a $300 billion company with offices all over the world. That's a huge mistake because the investor doesn't have reason to believe you can make that transition. And so what you want to do is start small, really start with what you're doing now and how that market is really interesting. And then if the investor's nodding along and getting into it, you start building, building, building, and then you start building, building. get, you can build all the way. And so that build, so, you know, average seed, maybe 18 months of runway, maybe 24 months, yeah.

Should be. I mean, things are getting a little crazy in the seed market in some places. You see companies raising three and four and five years of runway. Yeah. I actually think that's a huge mistake. When companies are overcapitalized, they tend to make the wrong decisions. They do things that seems safe, right? they do things they think to themselves,

oh, we have all this time, right? And so we have lots of time. Let's be super incremental about what we do. Or let's just hire a lot of people because people look good and therefore will be good. But in reality, the most precious resource to a startup is time.

It's not actually money. And that's a hard thing to understand, but it is time because startups have to move quickly. Right. We talked a few weeks ago just about how, you know, your startup's not growing really fast, that's a good sign that you're not doing the right thing. It's not necessarily a startup. If you want to get gigantic, you actually have to move quickly.

And a lot of time, people will use money as a way not to move quickly. You know, say, oh, well, we need a really nice office. We have all this money. Let's get the nice office. Or we need really nice swag. Right. You know, we need really nice jackets because that's what makes employees happy. Yeah, it's just all signaling bullshit. It's just crap. Yeah. And but, but if you live in a place where There are a lot of other startups with a nice swag. You know, you walk around in San Francisco and, you know, well, first it was just hoodies and then it was Patagonias and now some people have Arcterics and fancy backpacks and all this stuff.

And it's just, man, that's not the thing. But to push back at you for a second, what if you raise three years, four years of money, sock it away, don't hire a ton of people. Yeah. And just have the cash. Okay. So that's okay. but what ends up happening when you go out for your next round of financing, when you go for

your A, investors say, well, how much did you raise at your seed? Oh, we raise, you know, $4 million. Say, huh, you raise $4 million and yet you're only at, let's pretend, a million dollars in ARR, shouldn't you have gotten further on that money? And your valuation is higher. Right, right? So that hurdle is hard to cross. So investors expect more from companies that have raised more money.

And this is something that people just completely don't understand. And the investors don't really tell you when they're telling you to take their money. Like, oh, take our money. It's so good. But they're expecting way more progress on the money. Right. So investors don't want to give you money that sits in the bank account. Yeah.

Right? They want you to spend the money so that you can grow faster so that they can give you more money to own more of your companies so that you can grow faster. And it's the cycle. Yeah. So, okay. So just to jump back then, when you are talking to these investors about longer term, are we talking like, if you give me 20,

months of money, this is what we can expect in 24 months, or do you still push further in those conversations? It's both, right? It kind of has to be both. People want to see that you have a credible plan over the next 18, 24 months. They want to know what milestones you're going to hit, but they also want to know that you're thinking big. But it has to be attached, right?

There has to be a continuous line from one thing to another. Right. Right. People make this mistake where they have, I don't know, a discontinuous story. I don't quite know what the right term would be. Well, I'm just imagining it's like, and then we're on Mars. Right. And you're like, wait, what? Yeah. It's, um, you know, the underpants gnome. No. I like to talk about this one. The underpants gnome from, um, from South Park where it's, you know, um, there's these, the gnomes and they, the boys follow them through the, the, um, the lawn, the, uh, dryer. And they find out where all the underpants are gone. going, the underpants that go missing. And the underpants know them sell, well, first, you get the underpants. That's step one. Then step two. Step three, profit. And they keep out

what's step two? And there's no step two, right? Like, who knows what that thing is? And people notice that, right? You notice the gap in the story. And so you got to have a real rational reason of why things work. And by the way, this can be something incredibly ambitious. And sometimes people don't want to say it because it sounds too big. Well, investors invest in people who are very ambitious, right? They want really big. So you just have to make it really big but believable.

Yeah. And progress is the best way to argue that what you're saying is believable. Right. Well, especially looking backwards, like, we had nothing six months ago. Now, when it comes to people who are in the fortunate opportunity of having multiple offers from different investors, how should we think about evaluating seed investors, angel investors, especially in the context of your recent blog posts. Yeah.

At a high level, you know, okay, if you're lucky enough to have multiple offers, that's wonderful. Then you can start making decisions about whose money you can take. Most founders are not in that situation, right? Most founders who are raising money for their company don't have the luxury of choosing between different investors. Maybe they get to negotiate on terms, but they don't have the luxury of choosing between different investors, in which case, get the money you need to build the business.

That is the most important thing without losing control. of your company. Right. That's the thing. And people forget this because they hear these stories about, oh, this valuation, that valuation. Right, right, right. It's all window dressing. The only thing that matters is the money you need to build the business. Building the business and succeeding at the business is what counts is winning, right? Raising money is not. If you're in a position where you get to choose your investors, you should think carefully about who those investors actually are and what their incentives are. You know, everyone talks about, oh, venture capitalists, they fire you, they do this, they do that. It's not actually true. Yes, it happens. But it is true that venture

capitalists, because they are institutional funds, they have LPs who they represent, they have to make certain decisions that aren't necessarily in your best interest as a person. They're in the best interests of the success of your business and of their return. Angels were always seen as the opposite side of that equation. It was basically a bunch of eccentric people who had lots of money who like to throw money at businesses to help them. And maybe they got rich. In the last few years, there's been an acceleration of people who call themselves angels but aren't, right? They're, you know, this one person who's maybe a little well known who's actually raising money in some way on the back end from outside limited partners of one kind or another. And there's a bunch of different

versions of this. There's, you know, angelous syndicates. There's these things called special purpose vehicles. A bunch of the, read the essay, I wrote to learn a little. little bit more about this. And the point here is that none of these things are in and of themselves bad. It's good that there are more people with money to put into startups. What's bad is that a lot of these angels are not disclosing where their money comes from. And that is pretty shitty, right? That's not something that you should do. You shouldn't be lying to a founder with whom you are starting a relationship about what you actually are and where your money comes from. And founders sometimes only see this if they notice that the name on the docs, the legal entity that is investing, is something

weird. Right. And to put a fine point on it, the issue is you don't know what their incentives are. Exactly. You just don't know what their incentives are. And if you don't know their incentives, you don't really know what you're getting yourself into. And there's a more recent version of this that I'm seeing more and more of is just people who

are representing themselves as a single name, but are full VC firms underneath. institutional LPs, $5075 million. And, you know, listen, there's a lot of venture capital firms that have people's names on them. Sure. Right? Andrewson Horowitz, Kleiner Perkins, those have people's names on them, whether or not those original partners are still there. But they were honest from the beginning, we are a venture capital firm.

And I think that's honest. But if you're, give yourself a name, if I went out there as Aaron Harris, independent angel investor, and I really had $150 million behind me, that's weird. Yeah. And if people are hiding that, you also have to ask, why are you hiding it? What's going on that you are being dishonest about who you are and whose money you're investing? That indicates something is off in that situation. And I think founders should be really suspicious of when that happens.

To transition a little bit to Series A, how do you think about process? Obviously, Aaron working on the Series A program at YC, what does process look like for a series A company? So the process of fundraising for a series A company is not actually that different from a seed. It's just a different cast of characters and kind of a different amount of time between, you know, before you raise. So it usually takes 6, 12, 18, 24 months to build your company up to the point where you raise an A. When you do that process, it's the same logic that applies that seed. You want to run a parallel process with a bunch of investors at the same time and move through

quickly. There are some differences, though. A series A lead, a traditional series A lead, will want to buy, let's say, 20% of your company. It's actually a little higher than that when we look at our numbers. Something like 21, 22% is what they end up getting. And they're going to take a seat on your board, which means you have a deep relationship with them for the rest of the life of your company. Angel investors flit in, they flit out.

You never hear from some of them again. You don't really have to listen to them. Series A board member, yeah, that's a pretty big deal. And so you want to try to get the know of them a little bit ahead of time at least. And so what I advise companies to do is once you've closed your seed, get back to work for, you know, a month or two, whatever, and then start building relationships with Series A investors. Now, this is tricky because you can't, as a CEO, spend all of your time meeting with investors. And you shouldn't because what you should actually be doing is searching for product market. it fit and making sure you're building a good company. But you need to pick a set of three to five,

whatever, series A investors who you see every other month, once a quarter, something like that, and you meet them for coffee casually, right? Coffee lunch, whatever. And you have to focus on building a rapport versus giving them a full breakdown of everything going on with your business. Yeah. This isn't a pitch meeting. And investors need every meeting to be a, a decision point. They would like to be able to decide after any meeting with founder as to whether or not they're going to invest in the company or throw the company away. Because it's just time. Yeah. Right. And if you can filter through companies, you open up more time to filter through new companies. Right. So what you need to do as a founder is create a situation in which you remain

kind of the Schrodinger's cat, right, where they think it might be really good, but they're not sure. And so they need to try to open the box. And they keep trying to open the box and you keep closing the box, right? And so they don't know whether or not they can throw you out, but they think they need to keep going. And the way you do that is you share a limited set of metrics, but not everything. So you don't share full customer break, if, you know, full customer breakdown, all of your churn numbers, all that stuff. You give, you know, high level revenue, growth. And when they ask for, you know, data room access or all this stuff, you say, hey, I'm not fundraising right now. I just want to build this relationship because when we do go out and fundraise,

I want to know if you're the, you know, you're the investor. You're the right person for me? And if you do that right, you just sort of build this relationship. And if you're doing really, really well, that will trigger someone to say, hey, can I bring you in front of my partners? If you do this right. And your business is growing, by the way. Everything, everything is predicated on having a good underlying business.

Yeah. Or on just being, look, there are some people who are just unbelievable at pitching and they can pull money out of nowhere. you shouldn't try to be that. I just love the Shopify story in that context. Like he just showed up and like didn't even know what the metrics were that they were going to ask for. Yeah, he was on how I built this and he talked about it.

And he was like, let me go home and look that up. And he was like staying at a hostile NSF and had to like go back and query the database to find like KAC or whatever. Yeah. That's amazing. Yeah. That's pretty rare.

That's pretty rare. Yeah. Don't, don't model on that one. But okay. So just just to step back like you kind of. You kind of casually say, hey, you want to start setting up these, like, loose relationships with investors who might want to invest in your Series A in 18 months. Like, how do you even do that?

It's tough. Because you're now back at the point of maybe even cold emailing people. Right. It's tricky. If you're lucky enough to have a bunch of angel investors, use them to introduce you to the Series A investors that they know. A lot of them are pretty well networked. Some of them aren't. If you're not in that situation, don't worry.

Again, investors are excited about founders they think are building big things who will make them lots of money. And so you can kind of employ the same strategy that I talked about for Seed, but do a little, but there's more information to research about the investors. Investors tend to write blog posts and essays. They list the companies they've invested in on their venture capital websites. And so you email them and just make the pitch relevant, right? make it interesting, teach them something.

One trick I've seen some founders use is they're cold emailing an investor in the first couple times they, you know, they don't get a response. But they just keep emailing on a really regular basis progress. And they say, oh, you know, hey, we'd still love to meet so you know we grew 10% last week. Hey, we'd love to meet just so you know this month we crossed, you know, $3 million in annual revenue. You do that enough, but we're going to pay attention. Yeah.

Yeah. Yeah. Yeah. If they're good at their jobs. They'll be so good they can't ignore you line. Exactly. It's very important. It's true.

Yeah, of course. You know, people talk themselves out of doing this because they think, oh, I don't know anyone, therefore I can't know anyone, or I'm in some out-of-the-way place or whatever. Yeah. Good investors, and not all investors will do this, not all investors will put in the work, but good investors will be open to opportunities wherever they come from. Yeah.

They'll find you. The last thing I want to talk about is post-demo-day psychology. Yeah. So obviously you went through YC. You've now advised many, many companies in pre-during post-YC. I think it can be quite hard for a company to go through this really intense experience, which is often incredibly helpful and kind of fun for them, even if it's painful. Afterwards, your community's kind of maybe gone.

Maybe go back to wherever you base your company. what are your pro tips on figuring out that, you know, year after demo day? So there's a few different ways to look at this. I think the most important thing is to remember that no matter what happens with fundraising and no matter what happened with YC, the vast majority of the life of your company is ahead of you. And people will trick themselves into believing that, oh, YC's over, I can relax. or I raise some money, I can relax. Or I didn't get to raise as much money as I wanted.

I'm screwed. None of these things are true, right? That first three months or whatever it is is just a tiny blip. And you can take a super successful demo day and ruin it by spending the next year hiring 100 people and burning all your money. Or you can turn a really crappy demo day or really crappy fundraise into something. amazing by figuring out how to build without money and getting profitable and then growing, growing, growing, growing, growing, growing, and being really successful. And so I think that contextualizing whatever you did during YC in the long run of your life is really important. I think that is even more true when you think about the startup in the context of the rest of your life.

And I think that this is tough because we tell companies during YC, you know, this is your excuse to push off all social obligations, all this other stuff for three months. You can't do it much longer than three months and remain kind of a happy, productive person, but different people have different balances there. And I will say that really succeeding with a startup at the highest level requires a lot of sacrifice in other parts of your life. And you have to be okay with that or not. And you have to strike the balance that makes sense for you.

You know, if you have a young family, it's really hard to do a startup because a startup, a successful startup, a growing startup is all consuming in your life. And you might have to shut out everything other than your startup for periods of time. And that can wreak hell on your personal life. No one else can force you into that decision or not. That's your decision to make as a founder, whether or not you want to accept that. I think that there's a myth out there that you can have it all, that you can have, you know, all of your friends and the perfect personal life and the super fast growing startup and all that. And it's a lie that no one should tell you. And you shouldn't believe. Anyone who does anything truly great sacrifices something else in their life. And that balance is

different for different people. You know, I think for some people, you know, it comes down to choosing two out of three. You have your nuclear family or whatever. You focus on that and work. And friends or, you know, outside activities, fit him in when you can. And that's, look, that's a hard truth, I think, for some people to accept because people want to believe that, oh, I saw this person on Instagram. They're really successful and they're, you know, flying to all these vacations and this and that. And it's this lesson that you have to learn again and again that you have no idea what's

actually going on inside someone's head and in someone's life and in someone's startup. You can't model yourself on something you see externally at all. You have to find the balance that's right for you. And if you want, you should talk to other people who have gone through similar things. You know, if, you know, you're young and you don't have a family, you don't have a partner, and all you want to do is work, talk to other people about who were in a similar situation about how they made that work without burning out, right? Because it's still possible to burn out. If you're in a place in life where you're partnered, maybe you have one kid, a baby, an older kid, whatever, talk to someone else who's in that

position and who has seemingly accomplished the things that you want to accomplish and see how they did it and if they were happy with the trade and what they would have traded. And then talk to people who were in that position but are now in a different position. So talk to a bunch of different people about how they made it work and then make your own decision. But I will say that if you are making a choice to take venture capital, right, take outside funding. If you pitch people on this gigantic thing you're going to build quickly, you kind of have to do that. And you have to figure out a way to make it work or a lot of people are going to be disappointed and you're going to be disappointed at the end of the day. Right. And so everyone needs to find kind of the right balance

there, you know, which is good. Just don't lie to yourself and think you can have all the things. Well, I think that's just going into it with clear eyes and saying, hey, let's be realistic about what I can actually achieve here. Yeah. And wanting everything just sets you up for disappointment. And it's also, I think it goes even a little deeper than that. It's not just what can I achieve, it's what do I want to achieve. Sure. Right?

People, you know, people, I, everyone, you have these ideas of what you want. and sometimes they're right, but sometimes that evolves over time and you change the things that you want. And you can't assume that what makes other people happy or what seems to make other people happy will make you happy. It's helpful to read research on what makes people feel fulfilled and happy around a lot of these things as you think about.

And look, there are people who are only happy because they have become president. right or have led one of the biggest companies in the world, who created one of the biggest companies of the world. And some people have that, and some people just want to be home, building a wonderful family and being a valued member of their community. And those people are not necessarily different in their happiness

is that if they've actually genuinely achieved what they wanted to do, though the research would suggest that no matter what you do, having a healthy family life and friends is the thing that builds the most happiness. Yeah. Over the long run. Yeah. winning the money scorecard is not usually no no I know lots of very very unhappy wealthy people but on the flip side being poor can make you sad no sure and I'm not I'm not saying that and it makes

a lot of things a lot harder but the the point is that money isn't the thing and when you talk to people who have built gigantic companies the thing they're most proud of is not how much money they've made right the thing that they're most proud of is the impact they've had in the world and the change that they've wrought in the way humans live. That's what's so insane about startups. That's what gets me so excited. Think about how quickly Google impacted the number of people they've impacted. Nothing else in history moved that fast on that scale up until Google, right?

No nonprofit, nothing. And so that is, I mean, that's what gets me really excited. interested. That's the story, you know, when we started off talking about story. That's the thing. How do you rewrite the future? Right. And I think that a lot of people say, oh, well, I'm just a startup. We're not really going to change the way the world works. Really? Apple Shore did. Yeah. Microsoft did. Cisco did. Boeing did. Standard oil did. All these things were nothing when they started. And they changed the, they fundamentally shifted the, the, they fundamentally shifted the course of human history. That is, I know it's big, but that's what we're playing for. Yeah.

I think that's great. I think obviously everyone has to go start a startup now if they want to. Well, if they want to, right, if they want to make that trade. Yeah. It costs a lot to do that. Awesome. All right. Thanks, Aaron. Thanks, Craig. All right. Thanks for listening. So as always, you can find the transcript and the video at blog.combinator.com. And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.